Duke Energy reported that the cost of electricity for an eff

Duke Energy reported that the cost of electricity for an efficient home in a particular neighborhood of Cincinnati, Ohio was $104 per month (Home Energy Report, Duke Energy, March, 2012). A researcher believes that the cost of electricity for a comparable neighborhood in Chicago, Illinois is higher. A sample of homes in this Chicago neighborhood will be taken and the sample mean monthly cost of electricity will be used to test the following null and alternative hypotheses. Assume the sample data lead to rejection of the null hypothesis. What would be your conclusion about the cost of electricity in the Chicago neighborhood? The input in the box below will not be graded, but may be reviewed and considered by your instructor. What is the Type I error in this situation? The Type 1 error in this situation What are the consequences of making this error? The input in the box below will not be graded, but may be reviewed and considered by your instructor. What is the Type II error in this situation? The Type II error

Solution

A)

As Ho is rejected, then we conclude that the mean cost of electricity in Illinois is higher than that of Cincinnati.

b)

A Type I error is incorrectly rejecting Ho when it is true.

Here, a type 1 error is concluding that the mean cost of electricity in Illinois is higher than that of Cincinnati, when in fact, it is not.

c)

A Type II error is incorrectly failing to reject Ho when it is false.

A type II error is concluding that the mean cost of electricity in Illinois is not higher than that of Cincinnati, when in fact, it is.